That isn't how shorting works and what you posted shows that there is definitely no understanding about the mechanics of shorting.
"No Lack of understanding here. You put up some money for each share, Then you have an interest rate on the borrowed shares. Easy Peasy."
First, you BORROW the shares to short from a broker - he lends you the 1 million shares and they are immediately sold.
If company X has a price of $1 and you borrow 1 million shares - the 1 million shares are immediately sold and you have $1 million in your account.
You are betting the stock is going down - so you keep it for a month and the goes to $0.50 - then you buy 1 million shares for $500k. Then you repay the broker the million shares you borrowed from the broker and you have made $500k.
So much for the Easy Peasy understanding of how shorting works.
First you borrow the stock to short you don't - "You put up some money for each share"
And this is certainly not true - "Then you have an interest rate on the borrowed shares." That is absolutely not true - there isn't a interest rate you pay on the borrowed shares.
So you need to learn about a margin account - the trade cycle - the $2.50 rule - the difference between short volume and short interest.
The SEC defines a penny stock as a stock below $5.
The $2.50 rule applies when you are short selling stocks that are priced under $2.50. Basically, the rule states that for every share you are short, you still need to put up $2.50 of capital, even if the stock is priced lower.
That is why it isn't economically feasible to short real penny stocks - most of those shorting is where the price is above $5.
Also you need a margin account not a cash account - 99.9% of OTC investors have a cash account.
Hopefully you now have a better understanding of how shorting works.
Short selling can potentially be profitable … if executed well. But it’s insanely risky if it goes wrong — you could end up owing your broker money!
So short selling isn't easy and extremely risky.
IG
Market Data 
Markets 
AI
